SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Margaret A. Chan, J.), entered May 3, 2007. The order denied plaintiff’s motion for summary judgment and granted defendant’s cross motion for summary judgment dismissing the complaint.

Order affirmed without costs.
In this action by a provider to recover assigned first-party no-fault benefits, plaintiff’s motion for summary judgment was supported by an affirmation from plaintiff’s counsel, an affidavit by an employee of plaintiff and various documents annexed thereto. The affidavit executed by the employee stated in a conclusory manner that the documents annexed to plaintiff’s motion papers were plaintiff’s business records. Defendant cross-moved for summary judgment on the ground of lack of medical necessity. In support of its cross motion and in opposition to plaintiff’s motion for summary judgment, defendant submitted an affirmed peer review report and argued, inter alia, that the affidavit by plaintiff’s employee failed to demonstrate personal knowledge of the facts set forth therein and that, as a result, plaintiff failed to establish a prima facie case. The court below denied plaintiff’s motion and granted defendant’s cross motion, finding that plaintiff failed to establish its prima facie entitlement to summary judgment and defendant established its defense of lack of medical necessity. The instant appeal by plaintiff ensued.

Contrary to plaintiff’s contention, the denial of claim form submitted by defendant was not fatally defective. Although the defendant omitted certain sections from the denial of claim form, the sections were not relevant to the instant claim. The denial of claim form “promptly apprise[d] the claimant with a high degree of specificity of the ground . . . on which the disclaimer [wa]s predicated . . .” (New York Univ. Hosp. Rusk Inst. v Hartford Acc. & Indem. [*2]Co., 32 AD3d 458, 460 [2006] [internal quotations and citations omitted]), and defendant established that said denial of claim form was approved by the New York State Department of Insurance (id.).

Turning to the merits of defendant’s cross motion, the sworn papers submitted in support of same, including the affirmed peer review report, established prima facie that there was no medical necessity for the supplies provided by plaintiff, which evidence was unrebutted. As a result, the court below properly granted defendant’s cross motion for summary judgment (see Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App Term, 2d & 11th Jud Dists 2007]; A. Khodadadi Radiology, P.C. v N.Y. Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]).

Rios, J.P., Pesce and Golia, JJ., concur.
Decision Date: July 1, 2008

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Margaret A. Chan, J.), entered May 3, 2007. The order denied plaintiff’s motion for summary judgment and granted defendant’s cross motion for summary judgment dismissing the complaint.

Order affirmed without costs.
In this action by a provider to recover assigned first-party no-fault benefits, plaintiff’s motion for summary judgment was supported by an affirmation from plaintiff’s counsel, an affidavit by an employee of plaintiff and various documents annexed thereto. The affidavit executed by the employee stated in a conclusory manner that the
documents annexed to plaintiff’s motion papers were plaintiff’s business records. Defendant cross-moved for summary judgment on the ground of lack of medical necessity. In support of its cross motion and in opposition to plaintiff’s motion for summary judgment, defendant argued, inter alia, that the affidavit by plaintiff’s employee failed to demonstrate personal knowledge of the facts set forth therein and that, as a result, plaintiff failed to establish a prima facie case. The court below denied plaintiff’s motion and granted defendant’s cross motion, finding that plaintiff failed to establish its prima facie entitlement to summary judgment and defendant established its defense of lack of medical necessity. The instant appeal by plaintiff ensued.

Contrary to plaintiff’s contention, the denial of claim form submitted by defendant, which included a defense of lack of medical necessity as per a peer review report, was not fatally defective. Although defendant omitted certain sections from the denial of claim form, the sections were not relevant to the instant claim. The denial of claim form “promptly apprise[d] the claimant with a high degree of specificity of the ground . . . on which the disclaimer [wa]s [*2]predicated . . .” (New York Univ. Hosp. Rusk Inst. v Hartford Acc. & Indem. Co., 32 AD3d 458, 460 [2006] [internal quotations and citations omitted]) and defendant established that said denial of claim form was approved by the New York State Department of Insurance (id.). Consequently, defendant’s defense of lack of medically necessity was not precluded.

Defendant’s cross motion papers, including the affirmed peer review report, established prima facie that there was no medical necessity for the supplies provided by plaintiff, which evidence was unrebutted. As a result, the court below properly granted defendant’s cross motion for summary judgment (see Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App Term, 2d & 11th Jud Dists 2007]; A Khodadadi Radiology, P.C. v N.Y. Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]).

Pesce, P.J., Golia and Steinhardt, JJ., concur.
Decision Date: July 1, 2008

Supreme Court, New York County

602584/06

Attorneys for Plaintiff Alcon Builders Group, Inc.

Finger & Finger

158 Grand Street

White Plains, New York 10601

(914) 949-0308

By: Daniel S. Finger, Esq.

Attorneys for Defendant National Union Fire Insurance Company of Pittsburgh, PA

Sedgwick, Detert, Moran & Arnold

125 Broad Street, 39th Floor

New York, New York 10004

(212) 422-0202

By: Lawrence Klein, Esq.

Attorneys for Defendant/Third-Party Plaintiff U.S. Underwriters Insurance Company

Miranda Sokoloff Sambursky Slone Verveniotis LLP

240 Mineola Boulevard

Mineola, New York 11501

(516) 741-7676

By: Steven Verveniotis, Esq. and Todd M. Hellman, Esq.

Attorneys for Third Party Defendant Moklam Enterprises, Inc.

Dwyer & Brennan, Esq.

7 Dey Street, Suite 1401

New York, New York 10007

(212) 571-4067

By: Gerald Dwyer, Esq.

Attorneys for Third Party Defendant Andrzej Konieczny

Perecman & Fanning, PLLC

250 West 57th Street, Suite 401

New York, New York 10107

(212) 977-7033

By: Mariusz Sniarowski, Esq.

Helen E. Freedman, J.

This is an insurance declaratory judgment action arising out of a worker’s accident at a Manhattan construction site. Defendant/third-party plaintiff U.S. Underwriters Insurance Company (“Underwriters”) moves for summary judgment (CPLR 3212) dismissing the complaint and declaring that it does not have a duty to defend or indemnify plaintiff Alcon Builders Group, Inc. (“Alcon”) in connection with a personal injury action entitled Andrzej Konieczny v Moklam Enterprises, Inc., Alcon Building Group, Inc. Rockstar Games, Inc. and Take 2 Interactive, Inc., (New York County Index No. 111640/05)(the “Konieczny Action”).^[FN1] [*2]Alcon cross-moves for summary judgment declaring that Underwriters and defendant National Union Fire Insurance Company of Pittsburgh, PA (“National Union”) must defend and indemnify it in the Konieczny Action. National Union cross-moves to dismiss the complaint.

Facts/Background

The following facts are taken from the pleading, affidavits and documentary evidence submitted with the motion papers, and are undisputed except as otherwise indicated. In the underlying Konieczny Action, Andrzej Konieczny (“Konieczny”) alleges that on March 30, 2004, he was injured while working at a construction site at 622 Broadway, New York, New York, in a building was owned by third-party defendant Moklam. Konieczny was an employee of Michael Schondorf, Inc., (“Schondorf”), an electrical subcontractor retained by Alcon. Alcon was the general contractor at the site, having been retained to build an audio post production suite by non-party Janson Design Group LLC.

Underwriters issued Alcon a commercial general liability policy, CL 305375A (the “Primary Policy”), effective June 17, 2003 to June 17, 2004, with a $1,000,000 per occurrence limit. The main body of the Primary Policy set forth various exclusions, lettered “A” through “O” with subparts. Additional exclusions were contained in the separate endorsement pages supplementing the policy, including one entitled “Exclusion of Injury to Employees, Contractors and Employees of Contractors.” That section provided, in pertinent part, as follows:

This policy does not apply to:

* * *

(ii) “Bodily injury” to any contractor or any

“employee” of any contractor arising out ofor in the course of the rendering orperforming services of any kind or naturewhatsoever by such contractor or “employee”of such contractor for which any insured maybecome liable in any capacity . . . .

Alcon also obtained a commercial umbrella policy, No. EBU 7288966 (the “Umbrella Policy”) from National Union, a subsidiary of American International Group, Inc. (“AIG”). The Umbrella Policy was effective April 3, 2003 to April 3, 2004 and had a $4,000,000 per occurrence limit. The coverage was excess to the “Insured’s Retained Limited,” which was defined as “[t]he total of the applicable limits of the underlying polices listed in the Schedule of Underlying Insurance and the applicable limits of any other underlying insurance providing coverage to the Insured.” The Umbrella Policy also provided that National Union would undertake the duty to defend when “[d]amages are sought for Bodily Injury . . . covered by this policy but not covered by any underlying insurance listed in the Schedule of Underlying Insurance or any other underlying insurance providing coverage to the Insured.”

The Schedule of Underlying Insurance indicated that there was a general liability policy and an employer’s liability policy in effect. However, the schedule did not provide specific information about the policies, other than their dollar liability limits. In the space provided to identify the insurer, policy number and policy period, only dates appeared. The significance of [*3]the dates is not clear. If they were intended to indicate a policy period, it would be a period of zero years — 12/31/99 to 12/31/99.

The main body of the Umbrella Policy set forth a variety of coverage exclusions, lettered “A” through “T” with subparts. The exclusions included Alcon’s obligations under various laws (workers compensation, unemployment and disability benefits, ERISA, no-fault, uninsured and underinsured motorist) and damages to property owned, rented, occupied or used by Alcon. Also excluded was coverage for bodily injury or property damage caused or arising out of specified circumstances, e.g., use of watercraft, pollution, war. However, in at least three instances (injuries caused by fellow employees, watercraft and

intoxication), the relevant exclusion was qualified by the following language:

[I]f insurance for such Bodily Injury or Property Damage is provided by a policy listed in the Schedule of Underlying Insurance:

1. This exclusion shall not apply; and

2. The insurance provided by our policy

will not be broader than the insurance

coverage provided by the policy listed

in the Schedule of Underlying Insurance.

Numerous additional exclusions were set forth in the separate endorsements annexed to the Umbrella Policy. However, neither the body of the Umbrella Policy nor the endorsements contained an exclusion for bodily injury to a contractor’s employee.

The record indicates that the Umbrella Policy was procured through an application completed by a broker with the Brooks Insurance Agency, Inc. (“Brooks”). The application was completed electronically through an “e-Excess broker-interfacing underwriting platform” maintained by AIG Small Business (“AIGSB”), a member company of AIG. The application identified Underwriters as the underlying carrier, and in response to the question whether the Primary Policy was an “ISO Form with no manuscripted endorsements,” the broker responded “yes.” In response to the question whether there were “[a]ny exclusionary Endorsements attached to GL policy,” the broker answered “no.”

The Konieczny Action was commenced on by filing on August 19, 2005. The pleadings were served on the New York Secretary of State on September 6, 2005, which forwarded them to Alcon on September 13, 2005. The pleadings were provided to Underwriters by Alcon’s broker on September 14, 2005, and to National Union on September 15, 2005.

By letter dated September 15, 2005, Underwriters disclaimed coverage on the ground that Konieczny was the employee of a contractor and thus subject to the policy exclusion for such employees. Underwriters also disclaimed on the ground that Alcon failed to give notice of the accident until more than a year after its occurrence. After seeking additional information about the claim, National Union issued a disclaimer letter on March 3, 2006. In it, National Union cited late notice of the claim and asserted that it was also investigating whether it was entitled to rescind the policy based upon Alcon’s alleged misrepresentations regarding the existence of endorsements and exclusions in the Primary Policy. This action followed. [*4]

Discussion

For the following reasons, Underwriters’ motion is granted in its entirety and plaintiff’s motion cross motion as against Underwriters’ is denied. Plaintiff’s and National Union’s cross motions regarding the Umbrella Policy are both denied without prejudice to renewal following discovery on the issues of notice and the existence of other primary coverage.

Underwriters’ Motion for Summary Judgment

Underwriters’ motion for a declaration that it has no duty

to defend or indemnify Alcon under the Primary Policy is granted in its entirety. Although there may be questions of fact regarding whether Underwriters’ received timely notice of the claim (see discussion below in connection with the Umbrella Policy), coverage is defeated by the exclusion for bodily injury to contractors and their employees. The relevant language of Underwriters’ policy has repeatedly been held to be clear, unambiguous and enforceable (see, U.S. Underwriters Ins. Co. v 614 Constr. Corp., 142 F Supp 2d 491, 494-95 [SD NY 2001]; U.S. Underwriters Ins. Co. v Roka LLC, 2000 WL 1473607, at *4 [SD NY 2000]; U.S. Underwriters Ins. Co. v Zabar, 1999 WL 441472, at *3 [ED NY 1999]; U.S. Underwriters Ins. Co. v Beckford, 1998 WL 23754, at *3-4 [ED NY 1998]). Plaintiff’s argument that Konieczny does not fall within the exclusion because he was the employee of a “subcontractor” rather than a “contractor” has also been considered, and rejected, by the courts (see, Beckford, 1998 WL 23754, at 4 [“it is clear that the term contractor’ is a generic one, encompassing both general contractors and subcontractors; U.S. Underwriters Ins. Co. v Congregation Kollel Tisereth, Tzvi, 2004 WL 2191051, at *7 (ED NY 2004)]).

Without reference to this clear line of authority, Alcon attempts to distinguish this case on the ground that the Primary Policy itself gives separate, independent meanings to the terms “contractor” and subcontractor.” However, the only example provided by plaintiff is the policy’s use of the word “subcontractor” in an endorsement, where it appears in the heading of an amendment to an exclusion (“DAMAGE TO WORK PERFORMED BY SUBCONTRACTORS ON YOUR BEHALF”). The example only further weakens plaintiff’s argument, as the effect of the amendment is to remove a paragraph containing a reference to “subcontactors” from the main body of the policy.

Accordingly, Underwriters has no obligation to defend or indemnify Alcon in the Konieczny Action. Pursuant to the parties’ stipulation, the court will also issue a similar declaration regarding Underwriters’ obligations to Moklam.

Alcon’s and National Union’s Cross Motions For Summary Judgment

The cross motions of Alcon and National Union for summary judgment on the Umbrella Policy are both denied without prejudice. Although National Union’s attempt to disclaim on the ground that it was misled as to the nature of the primary coverage must be rejected, the record is not sufficiently developed to support a determination on whether the excess insurer received timely notice of the claim.

With regard to the misrepresentation defense, “[t]o establish materiality as a matter of law, the insurer must present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, which show that it would not have issued the same policy if the correct information had been disclosed in the application” (Roudneva v Bankers Life Ins. Co. of NY,

35 AD3d 580 [2d Dept 2006]); see, Insurance Law § 3105[c]).In arguing that Alcon [*5]made a material misrepresentation regarding the scope of the Underwriters’ policy, National Union

points out that the e-Excess application incorrectly denied that the Underwriters’ policy was supplemented by manuscripted or exclusionary endorsements. To explain the materiality of this alleged misrepresentation, National Union has submitted an affidavit from an AIGSB assistant vice president, Patricia S. Fargis (“Fargis”), who asserts that it was the practice of AIGSB’s Excess Casualty Division to “match” all exclusions and endorsements in the underlying policies. Thus, Fargis claims that if the application had correctly admitted that the underlying policy contained exclusions and endorsements, it would have been referred to an AIGSB underwriter for review to insure that the Umbrella Policy contained identical ones, including the exclusion for bodily injury to contractors and employees. Fargis states that because no endorsements were indicated, no underwriter review was triggered and the policy was simply issued by an administrative employee, Sara Chazin (“Chazin”).

The Fargis affidavit is problematic in a number of regards. For example, it admits that “AIGSB did not maintain any written guidelines regarding its practice of matching all exclusions and endorsements.” Furthermore, Fargis’ assertion as to whether and how Chazin processed the application is made upon information and belief, and Chazin identified as an “underwriter” rather than an administrative employee on the “Underwriting Checklist” supplied by National Union. There is also some question as to whether the Brooks agency was acting as agent for the insurer or the insured, and thus whether the alleged misrepresentations are chargeable to Alcon at all.

These issues need not be further explored, however, because information gleaned from the policies themselves belie National Union’s claim that the terms of the Primary Policy were material to its decision to insure or that it acted in reliance on any misrepresentations. First, it is undisputed that the Umbrella Policy was issued in April 2003, several months before the Primary Policy was issued. National Union’s policy thus could not have been issued in reliance upon anything contained in or annexed to the later-issued Primary Policy.

Second, the Schedule of Underlying Insurance in the Umbrella Policy does not meaningfully identify any underlying policy. Even if it is assumed that a predecessor policy to the Primary Policy was in effect when the Umbrella Policy was issued in April 2003 (and that the alleged misrepresentations were made in connection with the predecessor policy), that predecessor policy was not identified in the Schedule either. As noted, the Schedule merely refers to a “general liability” policy with a 12/31/99 to 12/31/99 term. Accordingly, the Umbrella Policy confirms that National Union did not issue it in reliance upon the terms of any underlying policy.

Third, Fargis’ claim that National Union’s had a mandatory “matching” policy with respect to exclusions and endorsements is refuted by a comparison of the Primary and Umbrella Policies. The multi-part exclusions set forth in the main body of the Primary Policy are not identical to those in the Umbrella Policy. Moreover, some of the exclusions the Umbrella Policy provided that they would be applicable if underlying policy provided coverage, while other exclusions applied regardless of underlying coverage. The Umbrella Policy was also supplemented by a series of endorsements containing exclusions not found in the Primary Policy.

Finally, the Umbrella Policy specifically anticipated that circumstances might exist where National Union’s coverage obligations would be broader that the underlying insurer. As [*6]noted, National Union obligated itself to defend bodily injury claims which were “covered by this policy but not covered by any underlying insurance.” While excess insurers do often issue policies which “follow form” and adopt only the language of the underlying policy (see, Matter of the Liquidation of Midland Insurance Co., ___ NYS2d ___, 2008 WL 1989667 [Sup Ct NY Co 2008]; Appleman on Insurance 2d § 145.1 at 6 [2003]), the Umbrella Policy at issue is not such a policy. Indeed, no effort was made by National Union to even examine the underlying policy, with or without endorsements.

Notwithstanding that the Umbrella Policy may provide coverage to plaintiff, the timeliness of plaintiff’s notice to National Union must first be resolved. That determination cannot be made on the present record. Although the nearly eighteen-month delay between the accident and notice to National Union would ordinarily defeat coverage (see, Those Certain Underwriters at Lloyds, London v Gray, 49 AD3d 1 [1st Dept 2007]; Deso v London & Lancashire Indem. Co. of Am., 3 NY2d 127 [1957]), such a lapse may be excused where the insured lacked knowledge of the accident (see, White by White v City of NY, 81 NY2d 955, 957 [1993]; Security Mut. Ins. Co. of New York v Acker-Fitzsimons,

31 NY2d 436, 441 [1972]). Here, plaintiff alleges that it was not aware of the accident until it was served with the complaint, an assertion supported by an affidavit from a corporate officer who states that he questioned plaintiff’s employees upon receipt of the pleadings and determined that no one was aware of the incident. Defendant is, of course, entitled to investigate the lack of knowledge claim by deposing plaintiff’s officers, employees and the injured worker, and seeking whatever documentary or other evidence may exist regarding the accident and whether it was reported. Accordingly, the motions of Alcon and National Union for declarations regarding the coverage issue are denied without prejudice pending the completion of such discovery.

Accordingly, it is

ORDERED, that the motion of defendant U.S. Underwriters Insurance Company for summary judgment is granted in its entirety, and it is further

ADJUDGED and DECLARED that defendant U.S. Underwriters Insurance Company is not obligated to defend or indemnity plaintiff Alcon Builders Group, Inc. or third-party defendant Moklam Enterprises, Inc. in the action entitled Andrzej Konieczny v. Moklam Enterprises, Inc., Alcon Building Group, Inc. Rockstar Games, Inc. and Take 2 Interactive, Inc.,(New York County Index No. 111640/05) and it is further

ORDERED, that the cross motions of plaintiff and defendant National Union National Union Fire Insurance Company of Pittsburgh, PA for summary judgment are denied without prejudice to renewal upon completion of discovery on the issue of timely notice of claim to the National Union, and it is further

ORDERED, that the Clerk shall enter judgment accordingly.

Dated: July 1, 2008

ENTER:

Helen E. Freedman, J.S.C.

Appearances

Attorneys for Plaintiff Alcon Builders Group, Inc.

Finger & Finger

158 Grand Street

White Plains, New York 10601

(914) 949-0308

By: Daniel S. Finger, Esq.

Attorneys for Defendant National Union Fire Insurance Company of Pittsburgh, PA

Sedgwick, Detert, Moran & Arnold

125 Broad Street, 39th Floor

New York, New York 10004

(212) 422-0202

By: Lawrence Klein, Esq.

Attorneys for Defendant/Third-Party Plaintiff U.S. Underwriters Insurance Company

Miranda Sokoloff Sambursky Slone Verveniotis LLP

240 Mineola Boulevard

Mineola, New York 11501

(516) 741-7676

By: Steven Verveniotis, Esq. and Todd M. Hellman, Esq.

Attorneys for Third Party Defendant Moklam Enterprises, Inc.

Dwyer & Brennan, Esq.

7 Dey Street, Suite 1401

New York, New York 10007

(212) 571-4067

By: Gerald Dwyer, Esq.

Attorneys for Third Party Defendant Andrzej Konieczny

Perecman & Fanning, PLLC

250 West 57th Street, Suite 401

New York, New York 10107 [*7]

(212) 977-7033

By: Mariusz Sniarowski, Esq.

Footnotes

Footnote 1: That branch of Underwriters’ motion which sought a declaration that it was not obligated to defend or indemnify third party defendant Moklam Enterprises, Inc. in the Konieczny Acton was resolved by stipulation dated October 8, 2007, in which Moklam agreed that it was not covered and stated that it did not oppose the declaration.

—[*1] Stern & Montana, LLP, New York, N.Y. (Richard Montana of counsel), for appellant.

Joseph Henig, P.C., Bellmore, N.Y. (Mark Green of counsel), for respondent.

In an action to recover no fault benefits under an insurance contract, the defendant appeals from so much of an order of the Supreme Court, Nassau County (O’Connell, J.), dated September 12, 2007, as granted the plaintiff’s motion for summary judgment on the first cause of action.

Ordered that the order is reversed insofar as appealed from, on the law, with costs, and the plaintiff’s motion for summary judgment on the first cause of action is denied.

The plaintiff made a prima facie showing of entitlement to summary judgment on the first cause of action to recover no fault benefits on behalf of its assignor, Vincent Dailey, by demonstrating that the prescribed statutory billing forms were mailed to and received by the defendant and that payment was overdue (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [a]; Westchester Med. Ctr. v AIG, Inc., 36 AD3d 900 [2007]; Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2005]). In opposition, however, the defendant raised a triable issue of fact as to whether the plaintiff complied with the defendant’s timely and properly sent verification requests seeking information regarding Vincent Dailey’s toxicology report. Accordingly, the plaintiff was not entitled to summary judgment on the first cause of action (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [a] [1], [2]; Westchester Med. Ctr. v State Farm Mut. Auto. Ins. Co., 44 AD3d 750 [2007]; Montefiore Med. Ctr. v Government Empls. Ins. Co., 34 AD3d 771 [2006]; Hospital for Joint Diseases v State Farm Mut. Auto. Ins. Co., 8 AD3d 533 [2004]; St. Vincent’s Hosp. of Richmond v American Tr. Ins. Co., 299 AD2d 338 [2002]). Fisher, J.P., Santucci, Angiolillo and McCarthy, JJ., concur.

Nassau Dist Ct

CIV 033/2008

cc:Amos Weinberg, Esq.

49 Somerset Drive South

Great Neck, New York 11020-1821

Jaffe & Koumourdas LLP

40 Wall Street, 12th Floor

New York, New York 10005

Robert A. Bruno, J.

Plaintiffs move for an order, pursuant to CPLR 3212, granting summary judgment in their favor in this action to recover fees for medical treatments provided under the no-fault law to their assignor Robert Aronov. Defendant opposes this motion and Plaintiffs have served a reply.

Plaintiffs’ assignor was allegedly involved in a motor vehicle accident on March 1, 2007. Plaintiffs submitted claims to Defendant, for which the complaint states $8,150.24 has not been paid. All claims, except for one for an examination on August 6, 2007 for which the Plaintiffs maintain no denial was ever received, were denied on the basis of the assignor’s failure to appear at an independent medical examination. Plaintiffs further contend that $4,301.45 of the claims were late.

On a motion for summary judgment, the court must determine if a triable issue of fact exists (Figueroa v. Gallagher, 20 AD3d 385 [2d Dept 2005]). A motion for summary judgment “should not be granted where the facts are in dispute, where conflicting inferences may be drawn from the evidence, or where there are issues of credibility” (Baker v. DJ Stapleton, Inc., 43 AD3d 839 [2d Dept 2007] citing Scott v. Long Island Power Authority, 294 AD2d 348 [2d Dept 2002]). To establish a prima facie case for summary judgment in a no-fault action, Plaintiff must show that the claim forms were timely and properly submitted and that Defendant has either failed to pay or failed to properly deny the claim within the statutory time frame (11 NYCRR §65-3.8[c]; Westchester Medical Center v. AIG, Inc., 36 AD3d 900 [2d Dept 2007]).

Plaintiffs claim that they have established their prima facie case for summary judgment by showing that the claim forms were timely and properly submitted and that Defendant has either failed to pay or failed to properly deny the claim within the statutory time frame (11 NYCRR §65-3.8[c]; Westchester Medical Center v. AIG, Inc., 36 AD3d 900 [2d Dept 2007]).

However, in order to lay a proper evidentiary foundation for the forms, bills and related documents necessary to establish Plaintiffs prima facie case, a supporting affidavit must establish [*2]that the tendered documents are a part of Plaintiff’s business records (CPLR 4518[a]; North Acupuncture, PC v. State Farm Ins. Co., 14 Misc 3d 130[A] [App Term, 2nd and 11th Jud Dists 2006]). Pursuant to CPLR 4518, to overcome the hearsay objection to a business records, four fundamental elements must be satisfied: (1) the record must be one which is made in the regular course of the business; (2) it must be the regular course of business to make such records; (3) the record must have been made at the time of the act or occurrence recorded or within a reasonable time thereafter; and (4) the person who made the record must have had actual knowledge of the event, records or must have received his or her information from someone within the business who had actual knowledge and was under a “business duty” to report the event to the maker of record (see generally Dan Medical P.C. v. New York Central mutual Fire Ins. Co., 14 Misc 3d 44 [App Term, 2nd and 11th Jud Dists 2006] citing William Conover, Inc. v. Waldorf, 251 AD2d 727 [3rd Dept 1998]).

In support of their motion, Plaintiffs have submitted the affidavit of Janet Safir, the medical biller and billing manager for each of the three plaintiff providers.

The Court finds that the affidavit of Janet Safir, sworn to on November 21, 2007, fails to satisfy the business record exception to the hearsay rule, although Ms. Safir states that she personally mailed various documents to Defendant in the ordinary course of business. The affidavit on its face fails to lay any foundation for any of the documents attached to Plaintiffs’ motion. It fails to provide any specific information regarding to who is her actual employer. Although Plaintiffs have offered defendant’s denials as acknowledgment of receipt of the bills provided, Plaintiffs have failed to lay a sufficient evidentiary foundation in satisfaction of CPLR 4518. Despite Ms. Safir’s purported personal knowledge of the manner in which Plaintiffs’ records are ordinarily kept, her affidavit fails to demonstrate what the manner consisted of and whether the records were recorded at the time the services were provided to its assignor or within a reasonable time thereafter, where the document was created, if it was created in the ordinary course of business and whether it is the regular course of the business to prepare said documents. Further, Ms. Safir fails to demonstrate that the procedures ordinarily implemented by Plaintiffs’ offices were the procedures implemented on the date the services were rendered to Plaintiffs’ assignor.

Since the affidavit of Plaintiffs’ biller was insufficient to lay a foundation for the admission, as business records, of the documents annexed to Plaintiff’s moving papers, Plaintiffs have failed to establish a prima facie showing of their entitlement to summary judgment. Accordingly, Plaintiff’s motion is denied.

This constitutes the decision and order of the Court.

So Ordered:

District Court Judge

Dated: JUNE 30, 2008

[*1]

Civil Court of the City of New York, Richmond County, June 26, 2008

APPEARANCES OF COUNSEL

Law Office of Peter C. Merani, New York City (William Larkin of counsel), for defendant. Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Mineola (Joaquin J. Lopez of counsel), for plaintiff.

{**20 Misc 3d at 845} OPINION OF THE COURT

Katherine A. Levine, J.

Plaintiff Prime Psychological Services, P.C. and defendant American Transit Insurance Company stipulated at oral argument that the sole issue before the court was whether the defendant’s failure to issue the denial of claim form (N-F 10 form) “in duplicate” was a fatal error, thus precluding defendant from asserting a defense which would result in the granting of summary judgment to plaintiff. There is no dispute that plaintiff established a prima facie case and that defendant timely mailed its denial of claim form, setting forth the defense of lack of medical necessity, to plaintiff.^[FN1] Defendant does not assert in its opposition that the claim forms were mailed in duplicate but simply states that the omission, if any, was neither “basic” nor “numerous” (citing Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2d Dept 2005]).

This issue presents a case of first impression since it appears that no court has directly ruled upon whether to grant summary judgment to a plaintiff when the sole deficiency in the denial of claim form was that it was not issued in duplicate. As such, a statutory analysis of the Insurance Law and the pertinent regulations promulgated thereto is in order.

Article 51 of the Insurance Law (Comprehensive Motor Vehicle Insurance Reparations Act) (added by L 1984, chs 367, 805, as amended), commonly known as New York’s No-Fault Insurance Law (No-Fault Law), provides a plan for compensation of victims of motor vehicle accidents for economic loss without regard to fault or negligence. (Oberly v Bangs Ambulance, 96 NY2d 295 [2001].) The general framework for payment of first-party benefits is contained in Insurance Law § 5106 (a), which states as follows:

“(a) Payments of first party benefits and additional first party benefits shall be made as the loss is incurred. Such benefits are overdue if not paid within thirty days after the claimant supplies proof of the fact and amount of loss sustained. If proof is not supplied as to the entire claim, the amount which is supported by proof is overdue if not paid{**20 Misc 3d at 846} within thirty days after such proof is supplied. All overdue payments shall bear interest at the rate of two percent per month.”

The Superintendent of the New York State Insurance Department promulgated Regulation 68 and codified it under 11 NYCRR part 65. The pertinent regulation in this case, 11 NYCRR 65-3.8, entitled “Payment or denial of claim (30 day rule),” provides in subdivision (c) (1) that

“[i]f the insurer denies a claim in whole or in part involving elements of basic economic loss . . . the insurer shall notify the applicant . . . on the prescribed denial of claim form, in duplicate, and shall furnish, if requested by the applicant, one copy of all prescribed claims form submitted by or on behalf of the applicant thereto” (emphasis supplied).

“The governing rule of statutory construction is that courts should look first to the statutory language in question, which is to be ‘generally given its natural and most obvious meaning.’ ” (Matter of Greenberg [Ryder Truck Rental], 70 NY2d 573, 577 [1987], quoting McKinney’s Cons Laws of NY, Book 1, Statutes § 94; Association of Contr. Plumbers of City of N.Y. v Contracting Plumbers Assn. of Brooklyn & Queens, Inc., 302 NY 495, 500 [1951].) “[I]f there is nothing to indicate a contrary intent, terms of general import will ordinarily be given their full significance without limitation.” (70 NY2d at 577, quoting Statutes § 114.)

The primary goal of the court in interpreting a statute is to determine and implement the legislature’s intent. (Matter of Tompkins County Support Collection Unit v Chamberlin, 99 NY2d 328, 335 [2003].) A court “may not reject a literal construction (of a statute) unless it is evident that a literal construction does not correctly reflect the legislative intent.” (A.J. Temple Marble & Tile v Union Carbide Marble Care, 87 NY2d 574, 580-581 [1996]; see Statutes § 73.) “[T]he legislative history of an enactment may also be relevant and ‘is not to be ignored, even if words be clear’ ” (Feher Rubbish Removal, Inc. v New York State Dept. of Labor, Bur. of Pub. Works, 28 AD3d 1, 5 [4th Dept 2005], quoting Riley v County of Broome, 95 NY2d 455, 463 [2000], quoting Statutes § 124, Comment, at 252). A construction which would result in absurdity is to be rejected (Statutes § 145; see McDonald v State of New York, 176 Misc 2d 130, 134 [Ct Cl 1998]). Furthermore, “[i]n construing a statute, the court should consider the mischief sought to be remedied{**20 Misc 3d at 847} and should favor the construction which will suppress the evil and advance the remedy.” (Matter of New York Life Ins. Co. v State Tax Commn., 80 AD2d 675, 677 [3d Dept 1981]; Marigliano v New York Cent. Mut. Fire Ins. Co., 15 Misc 3d 766, 771-772 [Civ Ct, NY County 2007].)

Therefore, despite the primary importance of literal construction, “[t]he courts may in a proper case indulge in a departure from literal construction and . . . sustain the legislative intention although it is contrary to the literal letter of the statute” (Feher Rubbish Removal, Inc. at 5, quoting Statutes § 111). “The letter of a statute is not to be slavishly followed when it . . . leads to conclusions, inconsistent with the general purpose of the statute or to consequences irreconcilable with its spirit and reason.” (Matter of Statewide Roofing v Eastern Suffolk Bd. of Coop. Educ. Servs., First Supervisory Dist. of Suffolk County, 173 Misc 2d 514, 517 [Sup Ct, Suffolk County 1997].) Thus, in [*2]construing a law, a court “will sometimes be guided more by its purpose than its phraseology, whereby a statute is not to be read with a literalness that destroys the meaning, intention, purpose or beneficial end for which the statute has been designed.” (Id.; see generally Statutes § 96.) In fact, the meaning of certain words may, in a proper case, be restricted or limited so as to avoid “absurd, unjust or other objectionable results.” (Matter of Statewide Roofing at 518; see Statutes § 113.)

It is imperative in ruling upon no-fault insurance matters not to lose sight of the fundamental goal of the regulatory scheme, which is “designed to promote prompt payment of legitimate claims” (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294, 300 [2007]) and prompt resolution of injury claims, to limit cost to consumers and to alleviate unnecessary burdens on the courts. (Pommells v Perez, 4 NY3d 566 [2005]; see also Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 285 [1997] [“The tradeoff of the no-fault reform still allows carriers to contest ill-founded, illegitimate and fraudulent claims, but within a strict, short-leashed contestable period and process designed to avoid prejudice and red-tape dilatory practices”]; All Health Med. Care v Government Empls. Ins. Co., 2 Misc 3d 907, 910 [Civ Ct, Queens County 2004] [the purpose of the no-fault statute is to encourage prompt payment of claims, to discourage investigation by insurers and to penalize delays].)

As the Court of Appeals noted in Matter of Medical Socy. of State of N.Y. v Serio (100 NY2d 854 [2003]), the most significant{**20 Misc 3d at 848} changes made by the Superintendent of Insurance, in adopting revised Regulation 68 (repealing and replacing the prior 11 NYCRR part 65),^[FN2] was a reduction in the time frames applicable to the filing of notices and proofs of claim—a consequence of the Superintendent’s determination that much of the abuse was associated with the lengthy time frames within which claims could be presented to insurers. The Superintendent also concluded that the shorter time frames would better effectuate the legislative purpose of providing prompt compensation “as the loss is incurred, while reducing rampant abuse.” (Id. at 867; Inwood Hill Med. at *4.) Accordingly, it is the court’s duty to interpret and apply the no-fault regulations in a consistent manner leading to the prompt payment of valid, documented claims. (See Marigliano v New York Cent. Mut. Fire Ins. Co. at 774.)

With these principles in mind, this court finds that the defendant’s failure to mail the N-F 10 form in duplicate is not fatal and does not render its denial a nullity. It should first be noted that contrary to plaintiff’s contention, no court has declared that a denial of claim form is fatally defective so as to warrant its preclusion solely on the grounds that it was not issued in duplicate. In New York Univ. Hosp. Rusk Inst. v Hartford Acc. & Indem. Co. (32 AD3d 458 [2d Dept 2006]) the plaintiff attacked the validity of the defendant’s denial, both because the defendant issued its partial denial by letter rather than by utilizing the prescribed N-F 10 form, and because the denial was not issued in duplicate. While finding that the denial letter adequately conveyed the information mandated by the prescribed N-F 10 form, the court still found the denial to be defective because “defendants failed to establish that the letter had been [*3]issued in duplicate and approved by the Department of Insurance.” (Id. at 460.) The Rusk court did not discuss plaintiff’s failure to serve the denial in duplicate. Furthermore, Rusk has only been cited for the proposition that the N-F 10 denial form was not sufficiently specific or particular to apprise the claimant of the grounds upon which the disclaimer is predicated and, hence, could not constitute a valid denial. (See Westchester Med. Ctr. v Allstate Ins. Co., 45 AD3d 579 [2d Dept 2007]; Elmont Open MRI & Diagnostic Radiology, P.C. v GEICO{**20 Misc 3d at 849} Ins. Co., 18 Misc 3d 1117[A], 2008 NY Slip Op 50113[U] [Nassau Dist Ct 2008] [N-F 10 denial form issued by respondent, neither on the prescribed form as it existed in 2005, nor on the form allegedly approved by the Insurance Department in 2002, was not valid since neither old nor new regulations permit an insurer to adjust or amend its forms on its own accord]; Olympic Chiropractic, P.C. v American Tr. Ins. Co., 14 Misc 3d 129[A], 2007 NY Slip Op 50011[U] [App Term, 2d Dept 2007].)

In fact, the source for the Rusk court’s pronouncement concerning the sufficiency of the N-F 10 denial form was Nyack Hosp. v State Farm Mut. Auto. Ins. Co. (11 AD3d 664, 665 [2d Dept 2004]), where the Second Department declared that “[a] proper denial of claim form must include the information called for in the prescribed denial of claim form (see 11 NYCRR 65-3.4 [c] [11]) and must ‘promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated.’ ” Furthermore, “[a] timely denial alone does not avoid preclusion where said denial is factually insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law” (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [App Term, 2d Dept 2004]).

In Nyack (supra), the court found the denial of claim form to be fatally defective in that it failed to include a number of the basic items called for in the prescribed form, such as the name of the health services provider, the date and amount of the claims being denied, and the date it received those claims. In Amaze (supra), the timely denial was found to be factually insufficient in that defendant failed to provide any specifics with regard to its conclusory defense that certain of the medical equipment was duplicative. Both of these cases found that preclusion was warranted because the content of the N-F 10 forms was not sufficiently specific.

There appears to be one case where a court addressed the repercussions that should attach to a party’s failure to serve a form in duplicate. In Nagy v Rothstein (53 Misc 2d 367 [Sup Ct, NY County 1966]) the defendant moved to dismiss the complaint because a notice of claim was never served and the complaint, which was not served in duplicate as required of a notice of claim, could not substitute for a notice of claim. The complaint, however, was served within the 90-day time period governing the service of a notice of claim. The court granted the plaintiff’s motion to treat the complaint, as originally served, as a notice of claim because the original complaint met all the statutory{**20 Misc 3d at 850} requirements of a notice of claim except that it did not set forth the plaintiff’s post office address and was not served in duplicate. The court first noted that it looks to the “substance of the paper served and not to its label,” and found that in accordance with the purpose behind the “notice of claim,” defendant “had due and timely notice of the incident and ample time to conduct its investigation.” (Id. at 369 [emphasis supplied].) As to the defendant’s assertion that no court has ever allowed a complaint to serve as both a notice of claim and a complaint, i.e., one paper served in place of two, the court stated that it “does not count the papers. It looks rather to their merit and their substance. No litigant who states a cause of action will be turned [*4]away by mistakes in labeling or in his counting of the papers required to be served.”^[FN3] (Id.)

The same reasoning applies to the instant matter. Plaintiff does not claim that the information contained in the N-F 10 was “insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law.” Nor does plaintiff contend that it was deprived of prompt specific notice as to the reasons for the insurer’s denial or that it was prejudiced because it only received one copy of the N-F 10. In fact, since the regulations set forth that both the original N-F 10 form and its duplicate shall be served on the medical provider, the service of the duplicate N-F 10 is basically redundant. As such, plaintiff’s contention that it must be awarded summary judgment because the denial was not issued in duplicate runs counter to the very legislative intent behind the No-Fault Law—to process claims within a short time frame and expeditiously so as to avoid prejudice and red tape dilatory practices.

As such, both plaintiff’s and defendant’s motions for summary judgment are denied and this case is to proceed to trial.

Footnotes

Footnote 1: Defendant commenced this motion requesting that the action be dismissed because plaintiff failed to rebut defendant’s denial of its claim on the grounds of lack of medical necessity. Plaintiff, in turn, brought a cross motion contending that it was entitled to summary judgment because defendant failed to establish that it had mailed the denial forms in duplicate, hence rendering its denial a nullity.

Footnote 2: For a detailed analysis of the history behind the amended Regulation 68, see Matter of Medical Socy. of State of N.Y. v Serio (100 NY2d 854, 860-864 [2003]) and Inwood Hill Med. v Allstate Ins. Co. (3 Misc 3d 1110[A], 2004 NY Slip Op 50565[U] [Civ Ct, NY County 2004]).

Footnote 3: While discussing the number of papers, the court never specifically addressed the fact that the complaint quo notice of claim was not served in duplicate. However, by granting plaintiff’s motion for leave to serve an amended notice of claim and an amended complaint, the court obviously did not find the failure to serve the papers in duplicate to be fatal.

District Court of Nassau County, First District

10700/07

Attorneys for plaintiff: Friedman, Harfenist, Langer & Kraut

Attorneys for defendant: McDonnell & Adels, P.C.

Andrew M. Engel, J.

The Plaintiff commenced this action to recover no-fault first party benefits for medical services allegedly provided to its assignor between February 1, 2002 and April 18, 2002, in the total sum of $200.00, which has not been paid. The action was commenced on or about March 22, 2007. Issue was joined on or about June 1, 2007. The Defendant now moves for summary judgment. The Plaintiff opposes the motion.

Summary judgment is a drastic remedy, Sillman v. Twentieth Century-Fox Film Corporation, 3 NY2d 395, 165 NYS2d 498 (1957), which should not be granted where there is any doubt as to the existence of a triable issue of fact. Rotuba Extruders, Inc. v. Ceppos, 46 NY2d 223, 413 NYS2d 141 (1978) To prevail, the movant must first make a showing of entitlement to judgment, as a matter of law, Bank of New York v. Granat, 197 AD2d 653, 602 NYS2d 942 (2nd Dept. 1993), tendering evidentiary proof in admissible form. Friends of Animals, Inc. v. Associate Fur Manufacturers, Inc., 46 NY2d 1065, 416 NYS2d 790 (1979). It is only thereafter incumbent upon the party opposing summary judgment to “demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action or tender an acceptable excuse for his failure so to do.” Zuckerman v. City of New York, 49 NY2d 557, 427 NYS2d 595 (1980). A movant’s failure to make such a showing, regardless of the sufficiency of opposing papers, mandates the denial of a summary judgment motion. Winegrad v. New York University Medical Center, 64 NY2d 851, 487 NYS2d 316 (1985)

“It is the position of the defendant that summary judgment should be granted as the accident of January 11, 2002 which is the subject of this claim was an intentional fraudulent act and therefore an uncovered event.” (Byrnes Affirmation 1/23/08, ¶2) The Defendant alleges, in [*2]the first instance, that this issue has already been decided in two (2) prior actions and that the Plaintiff is collaterally estopped from contesting this defense. In the alternative, the Defendant alleges that it has submitted sufficient evidence for the court to determine, as a matter of law, that the alleged accident of January 11, 2002 was no accident at all, but a staged event. Each of these arguments will be addressed separately.

In support of its collateral estoppel argument, the Defendant points to two (2) prior special proceedings seeking to permanently stay uninsured motorist arbitrations which had been filed by the driver and occupants of the vehicle involved in the alleged accident of January 11, 2002. One proceeding, State Farm v. Canela and Caba, was commenced in the Supreme Court of New York County; the other, State Farm v. Tavares and Fernandez, was commenced in the Supreme Court of Bronx County. Each of those applications was granted upon the default of the respondents therein. In addition thereto, the Defendant points to an order of the Civil Court of Queens County, in an action entitled Support Billing I Management Co. a/s/o Jeffery Canela v. State Farm Mutual Insurance Co., which afforded preclusive effect to the Bronx County default and granted the Defendant summary judgment.

“The doctrine of collateral estoppel, a narrower species of res judicata, precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same.” Ryan v. New York Telephone Co., 62 NY2d 494, 478 NYS2d 823 (1984); See also: Choi v. State, 74 NY2d 933, 550 NYS2d 267 (1989); G. Rama Const. Enterprises, Inc. v. 80-82 Guernsey Street Associates, 43 AD3d 863, 841 NYS2d 669 (2nd Dept. 2007) “Two requirements must be met before collateral estoppel can be invoked. There must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and there must have been a full and fair opportunity to contest the decision now said to be controlling (see, Gilberg v. Barbieri, 53 NY2d 285, 291, 441 NYS2d 49, 423 NE2d 807 [1981]).” Buechel v. Bain, 97 NY2d 295, 740 NYS2d 252 (2001); See also: Capital Telephone Co., Inc. v. Pattersonville Telephone Co., Inc., 56 NY2d 11, 451 NYS2d 11 (1982) There is no question, in the matter sub judice, that there is an identity of issue. In each of the actions relied upon by the Plaintiff, as in the matter before this court, the issue presented is whether or not the alleged accident of January 11, 2002 was a staged event. The questions confronting the Defendant, however, are whether or not this issue was previously decided against the Plaintiff herein, or one in privity with the Plaintiff, and whether or not this issue was necessarily decided in those prior actions.

It is not disputed that the Plaintiff was not a party to the prior actions upon which the Plaintiff relies. It is also undisputed the Plaintiff’s assignor was neither a party nor in privity with a party in either State Farm v. Canela and Caba or Support Billing I Management Co. a/s/o Jeffery Canela v. State Farm Mutual Insurance Co. Clearly, neither of these determinations can bar this Plaintiff from re-litigating the issue of a staged accident in the matter before this court. While the Plaintiff’s assignor was a party to the State Farm v. Tavares and Fernandez proceeding, the determination as to whether or not the Plaintiff was in privity with its assignor will depend upon when the assignment was made.

“In the assignor-assignee relationship, privity must have arisen after the event out of which the estoppel arises. Hence, an assignee is deemed to be in privity with the assignor where [*3]the action against the assignor is commenced before there has been an assignment.” Gramatan Home Investors Corp. v. Lopez, 46 NY2d 481, 414 NYS2d 308 (1979); See also: A.B. Medical Services PLLC v. State Farm Mutual Auto Ins. Co., 11 Misc 3d 1077, 816 NYS2d 693 (Civ. Ct. Kings Co. 2006) Given the fact that it is the Defendant’s burden to demonstrate “that the decisive issue was necessarily decided in the prior action against a party, or one in privity with a party[,]” Buechel v. Bain, supra ., See also: Capital Telephone Co., Inc. v. Pattersonville Telephone Co., Inc., supra ., before collateral estoppel will apply, it is incumbent upon the Defendant to provide proof of when the assignment herein took place. The Defendant, however, has not done so. Moreover, it would appear from the dates of treatment, February 1, 2002 and April 18, 2002, that if there was in fact an assignment of benefits, it occurred prior to the commencement of the special proceedings upon which the Defendant relies, the petitions for which are dated December 2, 2002.

Even more problematic for the Defendant is the fact that the two determinations upon which it relies were rendered on the default of the respondents therein. Before collateral estoppel will apply, the issue in dispute must have been “actually litigated and determined” in the prior action. See: Koch v. Consolidated Edison Company of New York, Inc., 62 NY2d 548, 479 NYS2d 163 (1984), quoting Restatement of Judgments, Second § 27; See also: Scultz v. Boy Scouts of America, Inc., 65 NY2d 189, 491 NYS2d 90 (1985) As the Court of Appeals has decisively stated in Kaufman v. Eli Lilly and Company, 65 NY2d 449, 492 NYS2d 584 (1985), “If the issue has not been litigated, there is no identity of issues between the present action and the prior determination. An issue is not actually litigated if, … there has been a default ….” See also: Chambers v. City of New York, 309 AD2d 81, 764 NYS2d 708 (2nd Dept. 2003); Zimmerman v. Tower Ins. Co. of New York, 13 AD3d 137, 788 NYS2d 309 (1st Dept. 2004)

The Defendant having failed to demonstrate that the Plaintiff herein was in privity with its assignor in the prior proceedings upon which the Defendant relies, and the prior proceedings having resulted in orders entered on default, they shall not be given preclusive effect in the matter presently before this court. The question remains, however, whether or not the Defendant has demonstrated that the alleged accident of January 11, 2002 was staged, as a matter of law. This question must be answered in the negative.

At the outset it is noted that the papers submitted in support of the Defendant’s motion are not in admissible form sufficient to support a summary judgment motion. The affidavit of Erin K. Lawler, the Defendant’s investigator, makes clear that she does not have any personal knowledge and bases her opinion of fraud on a number of documents obtained, inter alia, from the Defendant and the Department of Motor Vehicles, along with conversations she allegedly had with members of the New York City Police Department and the insurance company of the alleged adverse vehicle. The statements allegedly made to Ms. Lawler by unidentified police officers and by an unidentified individual for the alleged adverse carrier are clearly hearsay statements and inadmissible. Similarly, a number of the documents upon which Ms. Lawler relies are not submitted to the court; and, no proper foundation is laid for those that are submitted. Simply annexing documents to the moving papers, without a proper evidentiary foundation is inadequate. Higen Associates v. Serge Elevator Co., Inc., 190 AD2d 712, 593 NYS2d 319 (2nd Dept. 1993) [*4]

The Defendant also relies upon what are represented to be a number of inconsistencies in recorded statements and examinations under oath allegedly taken from the Plaintiff’s assignor and the other occupants of the vehicle in which he was a passenger. The court notes that these transcripts, particularly those of the examinations under oath, are of extremely poor quality and largely illegible. Unless the Defendant considers these pages to be nothing more than filler, it would behoove the Defendant, in the future, to provide the court with legible copies.

While the Defendant’s attempt to submit the transcripts of these examinations is not barred by the hearsay rule, because the Defendant is not offering the statements contained therein for their truth, Spensieri v. Lasky, 94 NY2d 231, 701 NYS2d 689 (1999); Nucci v. Proper, 95 NY2d 597, 721 NYS2d 593 (2001); Winant v. Carras, 208 AD2d 618, 617 NYS2d 487 (2nd Dept. 1994) lv. den. 85 NY2d 812, 631 NYS2d 288 (1995), but for the exact opposite reason, to show their falsity and fraud, Stern v. Waldbaum, Inc., 234 AD2d 534, 651 NYS2d 187 (2nd Dept. 1996); DeLuca v. Ricci, 194 AD2d 457, 599 NYS2d 267 (1st Dept. 1993); Dawson v. Raimon Realty Corporation, 303 AD2d 708, 758 NYS2d 100 (2nd Dept. 2003), the transcripts, nevertheless, are not properly before this court. These transcripts are neither signed nor verified, Krupp v. Aetna Life & Casualty Co., 103 AD2d 252, 479 NYS2d 992 (2nd Dept.1984); Tancos v. Centaur Insurance Company, 133 AD2d 622, 519 NYS2d 730 (2nd Dept.1987); and, the Defendant offers no explanation as to why. McDonald v. Mauss, 38 AD3d 727, 832 NYS2d 291 (2nd Dept. 2007) Additionally, the Defendant has not demonstrated any formal requirements for the taking of these individuals’ alleged testimony sufficient to assure their accuracy. Complete Orthopedic Supplies, Inc. v. State Farm Insurance Company, 16 Misc 3d 996, 838 NYS2d 861 (Civ.Ct. Queens Co. 2007) Notably absent from the transcripts submitted are certifications as to the transcripts’ accuracy, executed by the Notary Public who purportedly took the testimony. cf. Morchik v. Trinity School, 257 AD2d 534, 684 NYS2d 534 (1st Dept.1999); Cox v. Jeffers, 222 AD2d 395, 634 NYS2d 519 (2nd Dept. 1995) Without such certification, the Defendant is asking the court to rely on transcripts which may be inaccurate. Jacobs v. Herrera, 4 Misc 3d 1018(A), 798 NYS2d 345 (Dist.Ct. Nassau Co. 2004) Moreover, it has been recognized that while the transcripts of examinations under oath may be admissible to defeat a summary judgment motion, they “are nonetheless hearsay. As such, such statements are inadmissible at trial unless, for example, they are used for impeachment purposes upon cross-examination in the event such declarant/assignor testifies.” CPT Medical Service, P.C. v. Utica Mutual Insurance, 12 Misc 3d 237, 811 NYS2d 909 (Civ.Ct. Queens Co. 2006)

The above notwithstanding, even if the Defendant’s supporting papers were in admissible form, while this documentation “demonstrate[s] to the court that [Defendant] had a founded belief’ that the alleged accident was intentionally caused in order to survive a summary judgment motion by the plaintiff-provider … defendant-insurer’s founded belief is usually not enough to obtain judgment on its own.” Universal Open MRI of the Bronx, P.C. v. State Farm Mut. Auto Ins., 12 Misc 3d 1151, 819 NYS2d 852 (Civ. Ct. Kings Co. 2006) The papers presented by the Defendant raise a number of factual issues which are subject to the inferences to be drawn from the evidence presented, many of which involve an assessment of credibility, and all of which must be reserved for the trier of facts. St. Luke’s Roosevelt Hospital v. Allstate Insurance Company; 303 AD2d 743, 757 NYS2d 457 (2nd Dept. 2003); Kolivas v. Kirchoff, 14 AD3d 493, 787 NYS2d 392 (2nd Dept. 2005); Scott v. Long Island Power Authority, 294 AD2d 348, 741 NYS2d 708 (2nd Dept. 2002); Lacagnino v. Gonzalez, 306 AD2d 250, 760 NYS2d 533 (2nd Dept. [*5]2003); Ocean Diagnostic Imaging P.C. v. State Farm Mutual Automobile Insurance Company, 9 Misc 3d 73, 803 NYS2d 333 (App. Term 2005)

Accordingly, for all of the foregoing reasons, the Defendant’s motion is denied.

This constitutes the decision and order of this court.

Dated: Hempstead, New York

June 17, 2008

___________________________

Andrew M. Engel

J.D.C.

[*1]

Civil Court of the City of New York, Queens County, June 13, 2008

APPEARANCES OF COUNSEL

Emilia I. Rutigliano, Brooklyn, for plaintiff. Law Office of Karen C. Dodson, Melville (William Angstreich of counsel), for defendant.

{**20 Misc 3d at 782} OPINION OF THE COURT

William A. Viscovich, J.

Plaintiff brought this action to recover no-fault payments totaling the sum of $1,559 for medical supplies provided to the insured/assignor on September 21, 2005 and on October 3, 2005, for treatment of alleged injuries sustained in a motor vehicle accident occurring on September 16, 2005, together with statutory interest, statutory attorneys fees and costs.

A previous decision by Judge Lebedeff of this court, issued on May 9, 2007, had determined that plaintiff had made out its prima facie case, that defendant’s NF-10 denial dated November 16, 2005 was timely issued, that said denial was based upon a peer review and that the only triable issue was as to the medical necessity of the items furnished to the assignor. The parties further stipulated at trial as to the expertise of the peer review doctor, Dr. Susan Corcoran, in internal medicine and to the introduction into evidence of the peer review itself.

Based upon Judge Lebedeff’s previous finding regarding the plaintiff’s prima facie case and the stipulation entered into by the parties, the plaintiff rested, thus shifting to the defendant insurer the burden of rebutting plaintiff’s prima facie case of medical necessity.

The defendant called Dr. Corcoran who testified, in sum and substance, that there was no medical necessity for any of the supplies provided. Of particular relevance in this matter is that while the parties did stipulate to the [*2]admission of the peer review, they did not stipulate to the entrance into evidence of any of the underlying medical records and reports upon which the peer review was based. Nor did the defendant attempt to have them introduced even though they were relied upon by Dr. Corcoran in preparing both the peer review and her testimony.

After Dr. Corcoran’s testimony was completed, the defendant rested. Plaintiff presented no witnesses and also rested. Defendant then moved for a directed verdict of dismissal, arguing that the findings and opinions of Dr. Corcoran in her peer review and in her testimony were sufficient to demonstrate the lack of medical necessity for the supplies provided to the assignor and that they were not rebutted by the plaintiff.

Plaintiff opposed the motion, contending that pursuant to Wagman v Bradshaw (292 AD2d 84 [2d Dept 2002]) Dr. Corcoran’s testimony must be disregarded by this court since it was based upon medical records and reports that were not in evidence{**20 Misc 3d at 783} and for which there was no evidence presented regarding their reliability. (See Hambsch v New York City Tr. Auth., 63 NY2d 723 [1984].) Defendant countered that this court should apply the ruling of the Appellate Term, First Department, in Cross Cont. Med., P.C. v Allstate Ins. Co. (13 Misc 3d 10 [2006]), wherein the court held that a “plaintiff may not be heard to argue that defendant’s expert opinion was not derived from a ‘professional[,] reliable’ source or to otherwise challenge the reliability of its own medical records and reports.” (Id. at 11.)

The court denied defendant’s motion for a directed verdict of dismissal, and reserved decision on the ultimate issue as to the medical necessity, or lack thereof, of the billed-for supplies, pending a determination as to the admissibility of Dr. Corcoran’s testimony.

For the reasons stated herein, the court now finds that the testimony of Dr. Corcoran regarding the various reports not in evidence is admissible. As such, judgment is made in favor of the defendant and the matter is dismissed.

“It is well settled that, to be admissible, opinion evidence must be based upon one of the following: first, personal knowledge of the facts upon which the opinion rests: second, where the expert does not have personal knowledge of the facts upon which the opinion rests, the opinion may be based upon facts and materials in evidence, real or testimonial; third, material not in evidence provided that the out-of-court material is derived from a witness subject to full cross-examination; and fourth, material not in evidence provided the out-of-court material is of the kind accepted by the profession as a basis in forming an opinion and the out-of-court material is accompanied by evidence establishing its reliability.” (Wagman v Bradshaw at 86-87.)

The Court of Appeals has held that an expert witness may testify that he or she relied on out-of-court material provided that it is of a kind generally accepted in the profession as reliable and there is evidence presented establishing the reliability of the out-of-court material referred to by the witness (Hambsch v New York City Tr. Auth., supra).

Clearly in this matter, the first three possible requirements are not relevant, thereby leaving this court to decide if, pursuant to Wagman, the material not in evidence, which was relied upon by defendant’s witness, is accompanied by any evidence establishing its reliability. [*3]Pursuant to Hambsch, the court must{**20 Misc 3d at 784} also determine if the material in question is the kind accepted in the profession and if there has been any evidence presented establishing the reliability of those materials.

As to the Wagman issue, an initial interpretation of the testimony in relation to that case seems to indicate that the defendant offered no evidence as to the reliability of the documents relied upon, therefore requiring the court to disregard the testimony and thereby find in favor of the plaintiff. However, in addition to Cross Cont. Med., P.C. (supra), several recent cases in both the First and Second Departments, including the Appellate Term, First Department, seem to indicate that, at least in the context of no-fault first-party benefits, a plaintiff may not challenge the reliability of its own medical records which were relied upon by the insurer in preparing a peer review report.

First, in Home Care Ortho. Med. Supply, Inc. v American Mfrs. Mut. Ins. Co. (14 Misc 3d 139[A], 2007 NY Slip Op 50302[U] [App Term, 1st Dept 2007]), the Appellate Term, First Department, reversed a judgment in favor of the plaintiff in an action, as in the case here, brought by a medical goods supply company to recover assigned, first-party no-fault benefits. The lower court’s decision was at least partially based on its preclusion of the insurer’s expert’s testimony because it relied, at least in part, on a review of the assignor’s medical records. Following its previous decision in Cross Cont. Med., P.C. (supra), the court held that “[p]laintiff may not be heard to challenge the reliability of the assignors’ medical records and reports, which, in response to defendant’s verification requests, were affirmatively relied upon by plaintiff as proof of claim” (at *1).

Following the decision in Home Care Ortho Med. Supply, Inc. (supra), Judge Peter Sweeney of the Civil Court of the City of New York rejected the plaintiff’s contention that the insured’s experts should have been precluded from basing their professional opinions, in part, on the information obtained from plaintiff’s assignors during independent psychological examinations. Judge Sweeney went further in finding that

“the holding in Home Care Ortho. Med. Supply, Inc. is consistent with the legislative policy reflected in the numerous provisions of the No-Fault Law which provide for the prompt verification and disposition of claims (Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 222 [1996]; Presbyterian Hosp. in City of New York v Maryland Cas. Co., 90{**20 Misc 3d at 785} NY2d 274, 281 [1997]; Dermatossian v New York City Tr. Auth., 67 NY2d 219, 224-225 [1986]; Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co. 827 NYS2d 217, 220 (35 AD3d 720) [2nd Dep’t 2006])” (Primary Psychiatric Health, P.C. v State Farm Mut. Auto Ins. Co., 15 Misc 3d 1111[A], 2007 NY Slip Op 50583[U], *3 [Civ Ct, Kings County 2007]).

Finally, in a very recent case, Andrew Carothers, M.D., P.C. v GEICO Indem. Co. (18 Misc 3d 1147[A], 2008 NY Slip Op 50546[U], *2 [Civ Ct, Kings County 2008]), the court, also citing Cross Cont. Med., P.C. (supra), actually permitted the plaintiff’s medical records, which at least in part formed the basis of its peer review, to be admitted into evidence through its claims examiner as defendant’s business records. That court rejected plaintiff’s argument that their admission was inappropriate since the claims examiner was incompetent to testify as to the reliability of the records as she had testified that they were received by the defendant from the [*4]treating physicians and she had no knowledge of how these doctors created or maintained their records in the regular course of business. While this court may not have extended the business records exception to the hearsay rule to such an extent, the holding is consistent with the holdings in the other cases referred to above.

As for the Hambsch requirement that the material be generally accepted in the profession as reliable and that there be evidence establishing its reliability, the cases referred to above clearly indicate that the plaintiff cannot be heard to challenge the reliability of the particular documents. As for the professional acceptability of these items, Dr. Corcoran testified that they were sufficient to form the basis of a peer review and her expertise was stipulated to by both parties. Without any testimony to the contrary, this court finds that the out-of-court documents relied upon by Dr. Corcoran in preparing her peer review and her testimony are of the type accepted in the profession as reliable.

As such, this court finds that the defendant has presented sufficient evidence to establish a defense based upon a lack of medical necessity, thus shifting the burden to the plaintiff to present its own evidence of medical necessity (see West Tremont Med. Diagnostic, P.C. v GEICO Ins. Co., 13 Misc 3d 131[A], 2006 NY Slip Op 51871[U] [App Term, 2d & 11th Jud Dists 2006]). Plaintiff presented no evidence or testimony in this matter,{**20 Misc 3d at 786} choosing instead to rely upon its argument made above and its cross-examination of Dr. Corcoran. Without more, this court finds that plaintiff has failed to refute defendant’s expert witness testimony and has failed to produce rebuttal evidence to prove the medical necessity of the medical supplies provided to its assignor.

Accordingly, judgment is hereby rendered for the defendant and plaintiff’s complaint is dismissed.